Defence Offset Policy to generate Rs40,000cr worth of business: Pallam Raju

Kolkata: India's ministry of defence said Saturday that the country's private sector should be prepared to take advantage of the Defence Offset Policy, which is likely to provide manufacturing and business opportunities to the extent of Rs40,000 crore over the next five years.

Indian Army T-90s tanks in action

"Our anticipation is that the Offset opportunity will grow to Rs 40,000 crore (about $10 bn) in the next five years. This offers a tremendous opportunity (for the private sector)," minister of state for defence, MM Pallam Raju, told a press conference in Kolkata.

The Defence Offset Policy stipulates that foreign contractors catering to the Indian armed forces must source systems and components from local vendors to the extent of at least 30% of the value of orders of more than Rs300 crore. This may vary depending on the nature of the project,

Pallam Raju pointed out that in the case of the medium-range multi-role combat aircraft (MMRCA) contract, the offset value would be higher at 50%.

He also said that a number of global aerospace industries had started looking towards India as a hub for development of technology, and the primary driver for this outsourcing of aerospace engineering and manufacturing to India was the defence offset policy.

He said the value of the offshoring in the area of aerospace engineering currently stood at around $700-800 million, and this was likely to grow to $3bn by 2020. If manufacturing were to be included then the value would rise to $12 bn.